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“Ensuring the Strategic Planning Not Telling Us the Big Lie.”

– Theodore S. Pribadi, Partner & Advisor, éclat Consulting

 

Roger Martin, who is a professor at and former dean of the Rotman School of Management shocked the management world with his Harvard Business Review article from January-February 2014 issue: “The Big Lie of Strategic Planning.”

Martin mentioned that although all executives and managers had always believed about the importance of strategy, but they had been too scary to confront the uncertain future. What if their chosen strategies turned out to be wrong? Would those decisions wreck their careers? Reasonably, their natural reaction was to adopt proven and tested tools to minimize the risks of making poor decisions.

Unfortunately, Martin suggested that many of these tools would lead the traditional strategic planning toward the 3 Common Comfort Traps:

• 1^st Comfort Trap: Not questioning assumptions.
  Most strategic plans look pretty much the same, consisting of three major parts: ambitious vision and/or mission statements, a list of initiatives to carry out in pursuit of the ambitious goals, and the translation of those strategic initiatives into financials. Generally, these plans do not explicitly challenge what the organization should choose not to do and why. In essence, these plans do not question assumptions. The decisions are mostly dependent on affordability: whether or not the chosen initiatives fit the company’s available resources.

• 2^nd Comfort Trap: Cost-based thinking.
  Cost-based thinking tend to affect the traditional strategic planning, because costs are under the control of the company. The company makes decisions on how much costs to spend. But for revenue, customers are in charge. Consequently, the predictability of costs is fundamentally different from the predictability of revenue. Planning cannot guarantee that revenues magically appear. In fact, the efforts spent creating revenue plans could be a distraction from the strategist’s much harder job: finding ways to acquire and keep customers.

• 3^rd Comfort Trap: Self-Referential Strategy Frameworks.
  Most managers use the idea that a strategy emerges as events unfold to justify the reasoning that since the future was so unpredictable and volatile, it would not make sense to make strategy choices until the future becomes sufficiently clear. This interpretation comfortably concludes: No longer is there a need to make angst-ridden decisions about unknowable and uncontrollable things. The concept of emergent strategy has simply become a handy excuse for avoiding difficult strategic choices, which plays into the managers’ comfort zone.

“There are ways to ensure the strategy planning exercise
not telling us the ‘big lie’ of the traditional strategic planning.”

Well, as pointed out by Martin, there are ways to ensure the strategy planning exercise not telling us the ‘big lie’ of the traditional strategic planning. Our strategy planning methodology is consistent to Roger Martin’s Rules to Escape the Comfort Traps:

• Rule 1: Keep the Strategy Statement Simple.
  We unite and focus executives’ and managers’ energy on the key choices that influence revenue decision makers—that is, customers. Customers will decide to spend their money with companies whose value propositions are superior to their competitors’. Our strategic planning facilitators shall help organizations determine their successes by making these three choices (we added one more choice to what Martin originally suggested): which-desired-destination-and-when-to-reach-there decision (which desired-state to aim for and how long a journey is intended), where-to-play decision (which specific customers to target), and how-to-win decision (how to create a compelling value proposition for those customers).These decisions can be summarized into a one page Organization Journey Map with clearly articulated words and pictures. Our approach shall remain consistent with which destination and when to get there, where to play, and how to win choices to keep the discussion grounded. Our approach is intended to engage executives and managers with opportunities to grab, constraints to avoid, and challenges to anticipate, rather than maintain their existing comfort zone.

• Rule 2: Recognize that strategy is not about perfection.
  We unite and focus executives and managers not to after the impossible standard of accuracy and predictive power of ‘perfect’ cost planning. It is unlikely, because strategy should be primarily about revenue (which is under the control of the customers) rather than cost (which is under the control of the company). For that to happen, the boards and regulators need to reinforce rather than undermine the notion that strategy involves a great deal of uncertainties. Every time the board asks managers if they are sure about their strategy or regulators force them certify the thoroughness of their strategic decision-making processes, it weakens the actual formulation of the strategy. As much as boards and regulators may want the world to be knowable and controllable, that’s simply not how it works. Unless they accept this, they will get ‘traditional’ strategic planning instead of strategy planning—and lots of excuses down the line about why the revenue would not show up.Our ‘non-traditional’ entrepreneurial strategy planning approach triggers decision makers to ask themselves what can happen, rather than what will happen, in deciding their strategic choices. Thus, during the strategy planning facilitation they are encouraged not to start deciding their strategic choices based on their controllable resources. Instead, executives and managers should anticipate how they can anticipate and consistently create compelling value propositions to respond to their customers’ pain points in the future.

• Rule 3: Make the logic explicit.
  We unite and focus executives and managers to improve the hit rate of their strategic choices by testing the logic of their thinking. We do not limit our strategy planning facilitation with a single framework. Rather, we facilitate executives and managers to optimize their assets to solving problems and making decisions: intuitions, experiences, and methodology. To make sense of their strategic choices, they need to understand the pain points of their customers, the industry evolution, the competition, and their organization’s capabilities. Our strategy planning facilitation approach would get them to discuss and write down the answers to those questions on various tools and templates.Executives and managers need to record their logic to help them understand and see quickly when and how the strategy is not producing the desired outcome when compared with real events. As a result, they will be able to fine-tune and make the necessary adjustments accordingly. This is consistent to what was popularized by Henry Mintzberg in 1994, about his earlier 1978’s influential article on emergent strategy. Mintzberg distinguished between deliberate strategy, which is intentional, and emergent strategy, which is not based on an original intention but instead consists of the company’s responses to a variety of unanticipated events. By drawing a distinction between deliberate and emergent strategy, Mintzberg encouraged managers to watch carefully for changes in their environment and attune their deliberate strategy accordingly. If a company is too comfortable with its fixed strategic choices, it is at risk of neglecting the necessary alignment and attunement. Our approach shall drive the executives’ and managers’ conscious efforts to stay engaged and challenged with their company’s strategy versus the ever-changing, competitive business environment.

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